Why does it seem so difficult to find an equitable tax structure and intelligent budget plan for America? It seems like the politicians just can’t get it right despite having over 60 years to refine the tax code to make it fairer and over 200 years of national budgets to figure out smart spending. The middle class pays the majority of taxes in the U.S. despite the fact that they are not earning the majority of the money. Corporations have an abundance of tax loopholes to avoid taxation and get federal subsidies so they can make more money while middle class workers who drive the economy have very few tax deductions or government grants available to them and most of those few that exist require extensive effort to be taken advantage of.
So where is the answer? What is the brilliant solution to solve this horrific inequity? If you listen to the politicians, it’s right around the corner waiting for them to have the reigns in their hands. They have the plan to save us all. OK, so why is it that every time we elect one of these people that has the plan to solve all of our financial inequity problems they still don’t get fixed? Money is the simple answer. Those who have it, use it to keep it above all else. The rich lobby Congress, finance campaigns and give billions in “soft money” to the political parties so that you and I have to work that much harder for them in order to make ends meet from the table scraps they throw at us in the form of wages after taxation.
How can we solve this problem? There are many potential solutions. We could attack the waste issue first so that government would not need so much of our money. We could have a top to bottom audit of the federal government conducted by an independent auditing firm and find all of the waste that needs to be removed. Then it would be a matter of removing it and passing on the savings to the taxpayers.
Or we could attack the taxation issue first. We could move to a flat tax system without loopholes for anyone. We could set higher capital gains taxes for people earning more than $500,000.00 per year in investment profits and limit the reinvestment break for reinvesting those profits to bring some equity into the tax system. Another approach to taxes could be to eliminate taxes for people earning less than $50,000 per year as individuals and $150,000.00 per year as a family of 8 and re-tier the taxes of upper income earners to reflect their ability to bear the burden of taxes without jeopardizing a reasonable quality of life for them.
Those could all make a difference, but the big money savings to Americans would come by addressing big money spending by our government. We could eliminate corporate welfare and require that the federal government not subsidize any profitable companies for any reason. (True conservatives should like that one because it requires the corporations to sink or swim purely on their strength within the free market.) I would argue that the government should not be simply paying costs for profitable companies regardless of the nature of their business. If the government is getting a good or service for their money then there should be a bid process and a contract in place requiring results. Companies that make billions in profits should not get any subsidies from working Americans which is where the majority of the money is currently coming from.
Every working American pays for those subsidies out of our taxes. We all work and pay taxes so that those taxes can go to the people we work for!?! That’s insane! That means that if the company you work for receives federal funds, you are paying some of your own salary, your boss’ salary and the salaries of all of your coworkers with no say as to how much anyone gets paid. That’s like your employer drawing your paycheck out of your personal savings account. You get a check but the money was already yours. As an example, if your company gets $10,000,000.00 in subsidies from the federal government and the employees pay an average of $7500.00 a year in taxes, it took all of the taxes paid by 1333 people that year to pay for the subsidies your company got. Those 1333 people spent all of the hours required to earn that $7500.00 working for the company for free. The money they worked for went directly back to their employer. If their CEO made $10,000,000.00 then they all worked simply to pay the CEO’s salary. If the workers averaged $20/hr they worked 500,000 hours collectively to pay the CEO’s salary. That’s 375 hours each they worked for nothing more than their CEO to take a piece of their paycheck home. Over two months of 1333 people’s work for nothing more than one person to earn their money! That is unconscionable! There is no reason we should be working our tails off so that some person that is overpaid can be overpaid on our dime.
To put this in perspective it is estimated that the oil industry gets $3.6 billion dollars in tax breaks and subsidies each year from the federal government. At $20/hr it will take 180 million hours to pay for that tax break. That’s 450,000 work weeks. That works out to the sum total of 86,538 workers’ pre-tax annual salaries at $20/hr to pay for one industry’s government assistance. At the same time, oil companies are reporting record profits and raising prices nationwide. When you take into account that Chevron alone made over $17 billion in pure profits last year, this level of government irresponsibility with our tax dollars is mind-numbing.
How is it that people are not outraged? Why are there not protesters in the streets? Why are we all still dutifully paying our taxes and not voting the bums out? Sadly it seems that we as a nation have become complacent and oblivious to the actions of our leaders. We pay our taxes. We pay the high prices. We watch the rich get richer and keep playing our lotto in the hope of hitting the “big one”. We don’t think that it might be the fault of the politicians that oil companies are making money hand over fist while we struggle to fill up our tanks because we don’t take home more of the money we earn. We accept the things that the politicians say as being genuine and their motives as being pure without questioning them. Didn’t we learn anything from Watergate? ABSCAM? Iran-Contra? They not only can lie to us, they do it fairly regularly. We need to watch them like hawks. Any time a politician says he or she needs to spend your money you need to tell them to show you the justification for the spending. “Prove it!” should be the first words out of our collective mouths when they talk about the “need” for any government subsidies.
If we really want to get their attention, we all should change our W-4’s to Exempt and refuse to pay taxes as a nation one year in protest. If just one year nobody in the middle class paid taxes, it would force the politicians to do something about our broken system. If even 10% of the middle class went on tax strike, it would make a big stir. Let’s face it, the IRS, FBI, CIA and Secret Service combined couldn’t arrest 10% of the middle class all at once. They don’t have the capacity and they would be cash strapped because of the missing tax revenues from the people they would be arresting. (Quick caveat though: if you do decide to go on tax strike, to avoid the seizure of your assets, you should do what the rich folks do. Put your property in a trust for your kids. The fed can’t touch it if you don’t own it and if it’s not in your name, technically, you don’t own it. You’d be amazed at how many rich people put assets into trusts for children to avoid higher taxation rates and to protect them from seizure.)
So after all my railing you might be wondering if I have a plan that could work. As a matter of fact I do. The solution as I see it is to take on all the problems at the same time because leaving part of the system broken wouldn’t really fix it overall.
Here’s my plan:
1. A complete independent audit of federal spending should be conducted to determine where waste exists in government programs and agencies. (Waste such as overpayment for goods, exorbitant no-bid contracts and redundant staffing should be relatively easy to find with a careful review of the records.) Recommendations should be made as to how to eliminate the waste found with department heads responsible for elimination of all waste within five fiscal years. If waste is not eliminated by the second audit after five years, department heads would be released from the department and their pensions reduced to middle management levels. (No golden parachutes for incompetent government officials.)
2. A cost benefit analysis of all foreign aid should be performed to determine what benefit if any to the U.S. and larger world community being gained by the spending. Any foreign aid that is being given to governments who are uncooperative with the U.S. should be closely scrutinized for possible elimination. All military aid to nations that do not follow the advice of U.S. State Department officials for maintaining stability in their regions should be immediately terminated. (The money is not well spent if the actions of the nation being aided necessitate the involvement of U.S. troops or resources to correct situations created by their failure to heed our advice.)
3. Corporate subsidies in all forms should be removed from the current budget and outlawed in the future. (Any need based emergency funding to corporations to preserve jobs or support infrastructure should come in the form of federal loans only.)
4. All government monies going directly to corporations not requiring repayment should require a contract that has gone through a bid process and that stipulates the specific scope of the contract, the not to exceed dollar amount of the contract and penalties to the corporation for not meeting the goals of the contract.
5. Subsidies that have gone to corporations with net incomes of over $10,000,000.00 per year in the past should be reallocated to low interest micro-enterprise and small business loans to encourage small business growth in the U.S. and create an interest base of return on tax dollars spent on business.
6. Subsidies going to corporations with net annual incomes under $10,000,000.00 in the past should be reallocated for infrastructure and environmental programs to undo the damage done by corporate interests to the infrastructure and environment of the U.S.
7. Farm subsidies should be converted to low or no interest loans with limited eligibility for private farms without corporate backing. No funding should be allocated for price supports. Excess crops should be used for international famine relief with farmers being compensated a reasonable reduced rate for those crops that they were encouraged not to grow to support price stability in the past.
8. Corporate taxes should be restructured to give tax breaks only for investment in American jobs (including incentives for hiring ex-convicts to reduce recitivism), American education or necessary research and development with all deductions requiring documentation of the use of the funds. No deductions for those uses can include monies spent on salaries in excess of $150,000.00 per year.
9. Federal income taxes for individuals earning less than $50,000.00 per year, couples earning less than $75,000.00 per year and 3-4 member families earning less than $100,000.00 per year should be eliminated entirely. An additional $12,500.00 per child cap raise should be instituted up to 6 children for the no-tax income level with a maximum of $150,000.00 per year household income federal tax free for a family of 8.
10. Tax levels should be tiered above the no-tax income levels as follows:
- Up to $500,000 per year income – 20% federal tax
- $500,001-$750,000 per year income – 30% federal tax
- $750,001-$1,000,000 per year income – 35% federal tax
- $1,000,001 and above per year income – 40% federal tax
11. For the above taxation levels, the only deductions should be for investment in businesses that primarily employ American workers, donations funding public education, donations funding social services and donations funding disease research.
This is a simple plan. It does not make exceptions to every rule and addresses both the root causes of waste and inequitable taxation of our populace. Any politician who will commit to supporting a plan of this nature will get my vote provided upon taking office they introduce the legislation within the first 100 days of their term. Otherwise, they wouldn’t get my vote in the next election. Taxes don’t need to be unfair or complicated. We need tax dollars to run the government but we also need to make sure they are used wisely and equitably.
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Comments: 32
The following comes from the IRS (and I have heard similar numbers quoted elsewhere):
96 percent of all federal tax revenue comes from half of all taxpayers.
53 percent of all federal tax revenue comes from the top 5% of all taxpayers.
3.5 percent of all federal tax revenue comes from the bottom 50% of all taxpayers.
44 million taxpayers are estimated to owe no federal income tax and will receive a refund for every dollar that was withheld from their paychecks over the past year thanks to the new 10 percent bracket.
Source: U.S. Internal Revenue Service
A government, especially that of the United States of America, is an enormously complex thing. There are literally many thousands of branches, agencies and departments of that government and they all employ dozens, hundreds, thousands or tens of thousands of individuals. Auditing the entire thing in order to identify waste sounds staightforward but it is not. Every politician comes to office promising to root out waste. I'm sure many of them intend just that. However, their will is broken on the rocks of reality.
How do you identify waste. Sure, simple definitions like "overpayment for goods, exorbitant no-bid contracts and redundant staffing" sound logical, but the reality is more nuanced than that. Sometimes more expensive goods should be bought because experience has taught that the cheaper ones aren't worth the money. Emergency situations may, occasionally, require a no-bid contract to move things along more quickly. Redundant staff is not always easy to single out. Auditors can tell you if money was spent honestly, but will not always have the expertise in the area that the specific department specializes in to determine what is really overprices and who is unnecessary.
An audit of the nature you describe will cost hundreds of millions of dollars to conduct if not well into the billions. Sure, if it garnered the savings you imagine it will then it would be worth it.
Another proviso is that waste will also be subjective in terms of the actual policies. What one government will deem to be an essential program offering valued service to their constituents will be deemed a pork-barrel waste by the next government. Who is to say which is true? Are they both true, from different perspectives?
To address the rest of your plan in order:
2 - A cost/benefit analysis of foreign aid will be equally difficult to conduct because of the many different realities in the many different nations the money is being sent to. As for "correct(ing) situations created by their failure to heed our advice", keep in mind in many cases the failure being corrected is due to the advice that was given. Example? How about Afghanistan where US aid during the Soviet occupation basically amounted to advice to build a guerrilla fighting force, which we are now there combatting.
3- I agree that corporate subsidies are basically a bad idea and that they are way out of whack. But in order to compete globally, at times it will be necessary to subsidize some businesses.
4- Good proposal. Should work to the extent that government can be trusted.
5- Again, a good proposal. Micro business is the way to go.
6- Another good idea. Some subsidies, however, could be defended as being in the interest of the general public. Perhaps a very public case by case justification process.
7- Re-jigging farm subsidies, and thus the entire agricultural industry, is going to be complex and take time. However, I like your thrust. Keep in mind, the main goal of farm subsidies is to keep food prices low for urban voters. That will disappear along with the subsidies.
8- Sounds like you have already created some loopholes clever corporate accountants can work with.
9- You are eliminating a lot of tax dollars here. Sure, no one likes paying taxes. The reality is, though, that taxes are the price of civilization and, just as with everything else, you get what you pay for. I can see eliminating taxes for the working poor, but an individual making $50,000 or a couple making $75,000 or a family of 3-4 making $100,000 are not poor. They should pay taxes.
10- This addresses federal income tax only, I assume. There are many other forms of taxation including state income tax, sales tax, property tax and a host of obscure taxes that apply to specific transactions (land transfer tax, luxury taxes etc.). The whole system has to be looked at to achieve true tax fairness or assess whether your proposed levels look fair over all.
11- "Businesses that primarily employ American workers" sounds like a definition a corporate tax lawyer would enjoy interpretting. Same with the rest.
Yes, the plan is simple. However, that is its problem. Government is not simple nor is paying for it or taxing 300 million people and millions of businesses that are all different and unique. I'm not saying the current system is good, its not. Nor is it fair. The rich get away with paying too little and everybody else has to pay more than their fair share by comparison. Even worse, needed programs such as school funding and especially health care get starved for funds (not the military, though) and it would be worth it, in the end, for most Americans if they actually paid more taxes and got the services they need in those areas.
I'm going to share a sentiment that I see already in some other comments - you're a good guy with some good ideas....however..........
The Middle Class does not pay its fair share. The top 1% of wage earners make 19% of this country's income, yet pay 36% of its taxes. The bottom 50% pay almost no taxes at all!
The fallacy of the rich not paying their way simply isn't true. We need to give 'the rich' more tax breaks, not less.
Sadly, class warriors like Chuck Schumer and Ted Kennedy have put forth completely false data in the hopes that you won't look behind the curtain to see who's really the Wizard of Oz, tricking you every April 15th.
You have some good ideas. It would be refreshing to see a politician outline a plan in at least this much detail.
Corporatism is actually a form of fascism and it's high time someone in Washington address this problem.
Based on the numbers I was able to look up on the IRS website, it looks to be that actually people with income over $100,000 per year pay about 50% of the taxes not accounting for corporate shelters and undeclared income. So at some level you are correct about that assertion.
However, the tax burden does hit the middle class the hardest in that they are less capable of absorbing the losses to taxes than people of more substantial means. A family of three in California making less than $75,000 per year can barely afford to buy a cheap home in a bad neighborhood. While things might be better in the Mid-West it still is a struggle for people to pay their bills in part because the government gives multi-billion dollar subsidies to companies like Chevron who turn around and raise their prices so American families get hit even harder in the pocket book. That's not free market. That's the market run amok.
Well said. I agree that it is an uphill battle. But one worth at least trying to fight. At least we're all talking about something other than gay marriage or abortion. That's got to be some kind of positive.
I spent about a half an hour responding point by point and then my computer did the Bill Gates blues screen special...so I am going to exercise a little more brevity this time.
I agree that there are without a doubt kinks and potential flaws in my plan. The points you raised definitely gave me things to think about. I agree on some level with some of the things you say. It is not a simple problem and while this is a simple outline the implementation of it would be anything but. I do also think we need to overhaul our systems of taxation and spending. They are getting completely out of control and the working people of America ultimately pay the cost. We pay in either dollars or sweat but we do pay the cost in the end.
Thank you for taking the time and making the effort to eloquently voice your views on my article. I am honored to have been given so much of your time. I would love to invite you to post your own views on the website that I and some other people put together to encourage open debate of the issues facing America. The web address is http://www.reform-america.net Feel free to check it out and let us know what you think.
I appreciate your thoughts and respect that you have a right to your opinion. I don't happen to agree and personally am of the mindset that without the middle class who do the vast majority of the work in this nation, the rich are nothing. They enjoy the vast majority of the benefits of the working class' efforts so they should pony up more cash. What does a CEO produce compared to the thousands of employees they oversee? What larger benefit to American society are people like Paris Hilton?
It really comes down to how you see the value of the relative contributions people make to our society. Without the rich, the economy still functions. People still have skills and they will find ways to make the system work without the bosses. Without the workers, the country grinds to a halt and nothing gets done. Keep in mind that all the cops, ambulance drivers, firefighters, teachers, truckers, factory workers, contractors, etc. are middle class workers. Without our efforts the rich are insignificant.
Thanks for your comments. Obviously the plan needs more work and could use more debate but I think it might make a good start to fixing our broken system.
I think that corporations are necessary to the larger modern economy but they should not operate at the expense of the many to the benefit of the few. To your point, when they gain unfettered control of the government, we all lose. I wholeheartedly agree.
That is a good idea! Justifying budgets is supposed to be a part of the federal process but sadly Congressional oversight has become an oxymoron. It will likely take a massive scaling down of government before any real effective oversight becomes a reality on the federal level.
Yes Congress approves budgets and they should be held accountable for their mismanagement of our money. Congressional voting records are a matter of public record as is the federal budget. The voters need to start taking the politicians to task for the money they spend and what they spend it on. The appropriation bills that give away billions aren't hard to locate. Congress posts them online for all to read and the Congressional record tells you who voted for it and who didn't. It's not up to the President to fix it. It's up to the voters. We need to become more proactive in the political process and stop being such a nation of sheep following whichever politician sounds the nicest or looks the most convincing.
You have the right idea. Follow the dough. Find out who voted for what questionable giveaways and work to make sure that they don't have a government job come election night. It seems that the only thing politicians understand is being booted out of office so it's up to us the voters to help them to understand that we're tired of them wasting our money.
Did I really see sombody say "the middle class dosent pay its fair share"? I have an ex brother in law who is worth hundreds of millions and he will be the first to tell you that, "net" he pays NOTHING! Paaaaaleeeeez, lets not even talk about payroll taxes and all the things that are called "fees" etc that the wealthy do not pay at all.
All our systems have broken down because we are bleeding our money into the sands of the middle east and in many instances our far right wing politicians are intentionally starving social programs to death. This is not to say that we have not gone too far with social programs in many instances but they sure as hell should only extend to citizens for starters. As far as "an audit" is concerned, you could not get those books to balance if you used "the scales of justice" themselves. It will take better men than me to simplify the convoluted tax codes but a real simple place to start would be to re-institute "pay as you go". Worked pretty well for Clinton, and Bernanke and Greenspan before him have been screaming this "on the hill" for years but they have fallen on deaf Republican ears. When Gingrich spoke of letting social security die on the vine, he knew exactly what he was saying and today's GOP has applied that logic to damn near every federal program. One has but to look at Bush's track record as a businessman in TX to see what is happening to the entire country. Bleeding the assets dry like a vampire until all ya have left is a bloodless corpse and leaving shareholders with an empty bag when ya go "tits up"!
*sigh*
TO RAISE ALL THIS MONEY TO RUN IT WILL ALWAYS BE CORRUPT IN SOME WAY.
I THINK THE THE THINGS YOU SPEAK ABOUT ARE THE TRUTH BECAUSE YOU NEVER
HEAR THE TRUTH ANYMORE. THEY WOULD NEVER ALLOW THE CHANGES YOU ARE TALKING ABOUT. WE MUST HAVE A PEOPLE REVOLUTION WHERE WE STICK TOGETHER. STOP BUYING ALL THIS GAS DON'T BUY PRODUCTS AND FOOD WHICH
ARE SO HIGH IN COST ETC. AMERICANS AS YOU SAY ARE IN THAT MODE THAT
YOU CAN'T DO ANYTHING ABOUT IT AND THATS WHERE THIS GENERATION IS
WRONG WE STILL LIVE IN A FREE SOCIETY WHERE YOUR VOTE COUNTS AND
WHAT YOU DO CONTROLS WHAT IS SOLD AND FOR HOW MUCH. JUST STOP BUYING AND SEE HOW IT COMES DOWN. AMERICAN'S ARE SO USE TO NOT HEARING THE
TRUTH THAT THEY BELIEVE ANYTHING OR SAY EVERYTHING IS A LIE WITHOUT
DOING ANYTHING ABOUT IT. THEY HAVE THE AVERAGE AMERICAN SO BUSY MAKING
A LIVING THAT HE HAS NO TIME FOR POLITICES AND CONGRESS DOES WHAT THEY
WANT. THE ONE THING THAT THE FEDERAL GOVERNMENT DOES IS GET INTO STATE
BUSINESS AND THREATEN THEM TO DO WHAT THEY WANT . THERE IS NO SEPERATION LIKE IT IS SUPPOSE TO BE. THE FEDS HAVE TO MUCH POWER THATS
WHY THEY WOULD NEVER DO THE RIGHT THING LIKE YOU ARE SUGGESTING.
I would like to firstly abolish taxation without representation. I am told that this is why this country was even founded, but now I am part of the population here legally that cannot even vote on local tax increases. According to what this country is supposed to represent, this is wrong on every level.
Why did you go away from the flat tax and give a family that decides to have 6 children a bigger tax break? Why should anyone get a tax break for having children?
There will never be a flat tax rate as then everyone would pay their fair share including the very wealthy. Why should someone that puts themself through college to earn more, pay a higher rate of tax? This discourages anyone from making more. The middle class is the group that works hard to make more money and then just ends up in a higher tax bracket.
The reason you will never get a flat tax rate without all the exemptions is because then even the rich would have to pay. The reason they want to keep this hugely unfair system is because they can work round the system.
I totally agree with your point on the tax subsidies for corporations and the wasteful programs. I wish there was an effective way of auditing the govenment, but as mentioned above, this would be a huge undertaking and would cost more than you would probably save.
I don't know about paying for elections, but if evey candidate had to donate $1 to the national debt for every $1 spent on campaigning, there would be no national debt. It is ridiculous how much they spend slurring each other. If they actually campaigned on their policies, you might actually be able to vote for the person that truely represents your feelings.
Good points, but unfortunately, the rich run the world and so therefore they will stay rich and we will stay right where we are!
The rich are the leaders. Otherwise, they generally wouldn't be rich.
Most of the rest of the world has the system you describe : not many leaders, but plenty of cops, social workers, doctors, ditch diggers, secretaries, etc., etc.
Cuba is a great example of that.
The problem with that system is that the only real leader is Castro. Everybody else is a serf.
The rich in our country provide jobs, leadership, investment income for markets, and an overall knowledge gain. Without them, this country would be as bad as Cuba.......or worse.
There are always people who, somehow, find a way to rise above everyone else. Instead of looking at them negatively, why not help them do even bigger and better things?
The problem with your premise is that it assumes a level playing field to begin with. That does not exist. The rich are often the rich for no other reason than who gave birth to them. They have not risen above anything and could not survive without the efforts of the people keeping them rich. Wealth does not equate to leadership. There are many rich fools not qualified to lead a line of ants to sugar.
I could sit here and debate the flaws and advantages to Marxist and capitalist philosophy all night but it appears that you have polarized your position and to do so would be a waste of my time and yours.
I am truly confounded by your assertion. The ultra wealthy would stand to lose the most in my view. Just because they don't earn wages, doesn't mean they don't earn money that is taxable. I would make capital gains taxes have the fewest loopholes if I were in charge and I would also lift some of the restrictions on taxing trusts that currently shelter the ultra wealthy people's money. I didn't cover it but I would also propose adding a serious wire transfer tax for the offshoring of funds. If they want to hide their money in the Caymans, they need to be taxed when they're moving it. Believe me, I have no love of the ultra wealthy who don't actually put that much into the economy. The assets of the middle class are far more fluid in the economy because we can't afford to save as high percentages of our income and we have to by necessity spend more of our income on a percentage basis on goods and services. I didn't even touch on that but sales taxes disproportionately hit the wage earners below $100,000 per year in America because of the percentage of our income we have to spend to survive.
I'm not sure how I'm a patsy for the ultra wealthy. I would love to see a more indepth explanation of your assertion so that we can actually discuss them from a common frame of reference.
I have to respectfully disagree. The current system is set up with far too many ways to avoid taxation for those in the upper income brackets and no equitable relief for people that do the majority of the work to generate all the dollars the rich are accumulating but aren't paying taxes on.
As a simple example: A 55 year old employee's annual gross earnings are $40,000. He does not have basic, employer-paid health insurance coverage. He enrolls with a major carrier and his monthly premium is about $ 800. That's roughly 24% of his earnings ~ BEFORE taxes! He cannot take insurance expense as an itemized deduction on his taxes.
An employer carries a group health insurance on a 55 year old employee. The premium is by far less, because the employer gets a reduction in premium for having a larger number of employees. AND the employer's Gross Income is $100 million, AND the the employer receives the benefit of "payroll/operating expense" by covering the staff members (who qualify) as a tax break.
What's wrong with this picture? But, guaranteed ~ the government's solution would NOT be to allow a tax deduction for the employee. If the government disallowed the tax deduction for the employer, the employer would discontinue the employee health insurance benefit to his staff. Would the employer compensate the employee with an increase in wage equal to the reduction in benefit? Sure...when pigs have wings.
How would you feel about a Flat Tax?
Say 15%, if it penciled out.
1) There are ONLY two Classes of taxation that the U.S. Constitution gives Congress the authority to impose and enforce, they are: Direct taxes (Article 1, Section 2, Clause 3) which are imposed by the Rule of Apportionment; and Indirect Taxes (Article 1, Section 8, Clause 1) which are imposed by the Rule of Uniformity. The so-called "income tax" neither conforms to either class, which is why
congresspeople, the IRS, et a, ALWAYS refers to it as a system of "Voluntary Compliance."
This means, unbeknownst to the majority of people, you are "voluntarily" allowing
money to be withheld from your wages, and then "voluntarily" compute your own "income tax" and them "voluntarily" file the forms and pay the tax, which you have NO LEGAL REQUIREMENT to do. (Question: What other valid "tax" does the government tell you to compute on yourself?) That is why the IRS doesn't actively promote the fact that it acknowledges that at least 67 million people don't choose to "voluntarily" comply with the government's request to participate in the system.
I encourage people to see the film "America: From Freedom to Fascism" by Aaron Russo. Go to http://video.google.com/ and search on "freedom to fascism" to see total film, clips, et al. Read the book "The Federal Mafia" by Irwin Schiff, if you can still find a copy (its banned by the Courts!).
2) The 16th (so-called "income tax") Amendment was not Constitutionally ratified in 1913, and thus has no legal force of law. This has been undeniably documented in "The Law That Never Was Vol 1 & 2" by Bill Benson -- ww.thelawthatneverwas.com. This "fraud" was simultaneously unleashed onto American the same year Congress unconstitutionally (in violation of Article 1, Section 8, Clause 5)
created the Federal Reserve System, a private banking system which took out of the control of Congress the authority to set the value of our money. The "income tax" system and Federal Reserve are Siamese Twins.
3) The (unconstitutionally nonratified) 16th Amendment created no new Class of taxation (remember there are only two -- Direct and Indirect) but has been ruled by the Supreme Court to ONLY allow that the taxation of "income" should be done as an Indirect (excise) tax. BUT, BUT, BUT..the Supreme Court defined "income" to ONLY be a "Corporate Profit" (the excess of revenues above expenses). See the cases, Eisner v. Macomber, Pollock v Union Pacific Railroad, Stanton v. Baltic Mining,
Dolye v Mitchell, et al Also see the famous Brushaber v Famers Loan and Trust where the Supreme Court in 1896 ruled unconstitutional an "income tax" passed by Congress in 1894, which cause Congress to begin the effort to pass the 16th Amendment.
4) A "flat tax" is just a form of an (unconstitutional) "income" tax. It still requires the identification of people's and businesses earnings, which means it will ALWAYS cause people to resist, shield, not cooperate, and lie, about their earnings. And it still requires some draconian collection system to force people to comply with it, no matter how "simple" they claim they will try to make it. Feces with perfurme pored over it is still feces.
5) There already exists proposed legislation in Congress that will "fix" the tax system to make it Constitutionally valid AND raise sufficient revenue to fund the (legitimate) needs of government. This legislation is the Fair Tax Act, HR 25 and S-1025. HR 25, the House version (where constitutionally ALL tax provisions must start) already has 62 co-sponsors, and S-1025 has 4.
The Fair Tax will abolish: 1) all wage withholdings (FICA, SS, Medicare, et al) so that people get to take home 100% of wages and salaries, 2) all personal filing requirements, 3) the IRS as we know it, 4) the Internal Revenue Code (IRC) as we know it, 5) the use of "income" as the basis or taxation.
The Fair Tax will replace the current corrupt, complex, dysfunctional, and unfair "income tax" system based on "earnings" taxation with a Constitutionally (and economically) valid system based on "consumption" taxation, which 45 states already use already. A National Retail Sales Tax (NRST) will be imposed on the sale of services and NEW products (previously sold "used" goods will not be subject to the Fair Tax), at the initial rate of 23% tax inclusive. This means for every
dollar of taxable good sold 23 cents will be the Fair Tax. Thus, people can choose the level of taxation they incur by the level and type of spending they choose to engage in. But also, the Fair Tax creates a "prebate" system, so that every elligible family (size 1 on up) can get a monthly check from the government (ala Social Security) which is designed to offset the effect of the Fair Tax on purchases up to the official poverty level for a given family size.
I would encourage anyone really interested in producing true good tax reform to understand what the Fair Tax is and does, and then support its passage. It is certainly not "perfect" but IT IS unquestionably eons times better than the present mess we are saddled with and other proposals.
For more information on the Fair Tax, read HR 25/S-1025 on http://thomas.gov
and visit Americans For Fair Taxation (AFFT) at www.fairtax.org
and visit its MySpace page at: www.myspace.com/fairtax.
The tax system affects EVERY aspect of life in this country because it directly, and indirectly, controls the flow of wealth of the people. The Fair Tax puts the power of your labor, and the purse, back into the hands of "we the people" and makes government, again, subservient to us.
As was famously stated long ago...
"When the people fear the government, you have tyranny.
When the government fears the people, you have freedom."
And, as I say:
When the government controls our money we have slavery.
When we control our money we have freedom.
If there were a floor level set for the flat tax so that people with families and low income people were taken into account, I would not have a problem with a flat tax. The one caveat is that it would have to be devoid of loopholes for it to be effective.
Jabari raised an interesting point with his comment on the Fair Tax bills. Basing taxes on consumption rather than income could bring some equity if it were managed properly. If you made sure that food and household items such as toilet paper that everyone needs were not taxed and set fair tax rates on goods and services, you could get rid of income tax entirely. I would add to that though carbon taxes and profit margin taxes to balance the costs of business and industry to America. Profit margin taxes as opposed to pure profit taxes because the amount of profit can be decpetive until you look at the percentage of profit to cost. Taxes should be based on per dollar spent profits as opposed to an aggregate amount taxation to avoid making businesses unprofitable because of taxation.